I had thought that maybe I had run out of things to be angry or frustrated about which was why my blog was moving over to nicer things like movies and books I find interesting. However, there is always the unexpected. This week my car broke down and I found I can only afford to buy and older or smaller one; it turned out someone had been misusing my credit card but weirdly only for sums of £10-20 and once just for 52p; then my landlord's father said his son (currently in the USA) wanted to sell the house we have been living in for the past five months. This fact, combined with what I heard from an estate agent at a barbecue recently, provoked me to return to the British obsession - property.
Up until now myself and the people I live with have had to move house on average every 16 months. We reckon we lose about £1000 (€1460, US$2000) every time we move. Now, however, the gap between when we are forced out of our houses seems to be decreasing. This is coming about because of interest rate rises to try to slow inflation in the UK. They make mortgages more expensive and there is a fear as in 1990-3 house prices will fall sharply and lots of people will have 'negative equity', i.e. they owe more on their house than it is now worth. Since the 1990s with so many companies stealing pension funds or closing them to workers UK people feel that the only way to secure their old age is to buy property and rent it out then sell it off when they retire. 'Buy-to-let' has been so common in the UK. In some ways this is good as it has put much needed rental property into the system, though this has not come without costs.
Many people, like me, rent a house but own a smaller property that they rent out as their pension scheme. I bought a flat having lived there for a while got work far away from it so I was not 'buy-to-let' but I moved into that class when I put it up for rental. It has now become such a liability because of random, arbitrary charges from Newham Council that I am selling it. I am not alone. Those buy-to-let people are finding the mortgage payments get harder to meet, especially as their rent is rising quickly (about 20% per 18 months in my town). The 'for sale' signs are appearing everywhere now and this is likely to trigger the crash in prices that they are all trying to avoid. For tenants it is proving a nightmare as with us, a few months after you move in, you find you have to leave when the house is sold. In the case of a couple I know, the house they rented once they married a few months ago, apparently was already on the market but the landlord never told them. His greed meant he wanted to keep getting rent up until the day he sold the property. (This is encouraged by the fact that the landlord since 2004 has had to pay council tax on empty properties). So much for their new home together, four months down the road they have to move again and have no guarantee they will not be treated the same at the next house they rent. This has happened to another local couple I know too and I imagine it is occurring across the UK. UK tenants have few rights and little comeback.
I was under the impression that a lot of rental property fell into this category, that as tenants these days you tend to rent from someone who owns one place. Often, as I thought was the case with my current landlord, they get work somewhere else abroad and rent the house out just in case they need to come back and live there again in the future. However, when I found out the landlord's father has bought 47 (forty-seven) houses since 2001, I realised that I had been missing a whole situation. The buy-to-let people are small fry, there is a whole 'rentier' class above them who distort the economy in many towns. In fact I then realised I had seen more examples in the newspapers. You may ask what is so bad about people expanding their businesses in this way. The problem is that it is them who are driving up both house and rental prices. This was where something else I had been oblivious to comes in. Talking to an estate agent recently she said that in her office they never advertise around 50% of the houses they are asked to sell, they just contact landlords directly and offer the houses to them. This restricts the supply of properties coming on to the market and so artificially inflates the prices. In addition landlords are not as fussed as owner-occupiers in getting the lowest price as long as the rental income can cover their mortgage, they would in fact like quicker rising house prices and it increases their equity faster. In addition, they get a pick of the properties meaning people actually trying to get a place to live in are simply left with the rejects. I know one family who are now searching over a 40 mile (64Km radius) to try to find a decent house.
You might say, well, with these rentiers owning so much property there must be a lot available for rent. Yes, that is true, but effectively in each town you get a cartel. There is no ability to shop around. In a town of say 150,000 people at any one time there are likely to be no more than 30 properties of a particular type, for example 3-bedroom houses, to rent across the town, these may all be owned by just 5-8 people. There are obviously seasonal fluctuations, the bulk of the agencies we visited in January had no properties at all to let, and if you want a 2-bedroomed flat there will always be more available than say 4-bedroomed houses. Anyway, they set the prices and you have little choice because there is no free market and little true competition. Inflation in the UK has been running around or below 3% for years now and interest rates below rising to a little over 5%. So how come rental prices are rising at 10-12% per year? With all the people who own one buy-to-let property now selling up, competition will shrink further as these will be snapped up by the big rentiers with the money to weather any financial squall.
Despite all the rhetoric since the early 1980s of the free market meaning competition and that meaning better service and lower prices, in fact the UK has ended up with capitalism working in a different way with a few individuals manipulating the market, unfettered by regulation to ensure that they grow even richer at the expense of the bulk of the population financially beneath them. Maybe we have got the flexible labour force Thatcher wanted, but unlike what the Thatcherites envisaged of workers moving where there is work, we are shackled by unbreakable long-term contracts and then are kicked out when the sale price of the house becomes worth more than keeping you living there. This is a labour force which does not move on its own accord, it is one that is driven like a flock of sheep by the rentiers.